Fed’s Collins: IT’s time for mon pol to be patient and deliberate

  • Fed should ‘allow time’ when making monetary policy choices
  • Too soon to say inflation sustainably moving back back to target
  • Fed must balance lowering inflation against slowing economy too much
  • Fed can likely achieve goals without causing notable economic pain
  • Still too much job market demand
  • Wage growth remains elevated
  • Core services inflation moderation has been modest
  • Expects economy to slow into end of year

Collins said now is the time to be patient and deliberate with policy. There’s a sense of unanimity at the Fed to hold off on hiking in September but to consider hiking later if inflation stays high. The Nov 1 meeting is showing a 40% chance of a hike.

Key passage:

The risk of inflation staying higher for longer must now be weighed against the
risk that an overly restrictive stance of monetary policy will lead to a greater slowdown in
activity than is needed to restore price stability. This context calls for a patient and
careful, but deliberate, approach to policy, allowing time to assess the effects of policy
actions to date, and then acting appropriately. Importantly, patience does not mean
indecision, or a change in the commitment to the 2 percent target, but rather time to
ensure that the economy is on a clear trajectory to achieve price stability.

This article was written by Adam Button at www.forexlive.com. Source